PM desperate to maintain the squeeze

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Despite its three scoring punches, Labor has to be alert for one surprise blow, writes Peter Hartcher.

Fay Wray, the actress who made about 100 movies but is only remembered for one - the original version of King Kong - died this week. She will forever be known as the screaming blonde struggling in the giant ape's fist in the 1933 movie. And that's all she'll be remembered for.

Today we see the new and energetic Opposition Leader, Mark Latham, struggling in the fist of the country's third-longest serving Prime Minister, John Howard, the Machiavellian monster threatening to crush the neophyte leader much as he dispatched the last three Labor leaders - Paul Keating, Kim Beazley and Simon Crean.

But unlike those three, who have had long public lives and cabinet portfolios, Latham has flared briefly into the public view and, if crushed now, could well be remembered, like John Hewson, only as the man who promised greatness but lost in his moment of testing.

Howard has been gradually tightening his squeeze on Latham. Since Labor's peak in March, Howard has pared back its decisive lead of 10 per cent in the two-party preferred vote to a dead heat by last week, according to Newspoll. But Latham is campaigning tenaciously at the moment, squirming hard and effectively to deny the gorilla a death grip.

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He has recovered his power of springing surprises on the Howard Government, one of his hallmarks and a factor that the Prime Minister seems to find highly unsettling. Because, after all, John "Tampa" Howard has been the master of surprise in Australian politics.

The body of ancient Chinese military strategy that has been collected in the work Art of War under the name of Sun Tzu, the fountainhead of all modern study of strategy, has explained the unique power of surprise:

Open confrontation will trigger/

over-powering resistance. Thus the key/

to victory is the ability to use surprise tactics.

Today, the leaders of both big federal parties are effective wielders of surprise as a political weapon. But there is a big difference. While Latham has specialised in tactical surprise, Howard has used strategic surprise, and to devastating effect. Labor is deeply and rightly worried that Howard is planning to use it again.

In these past two weeks Latham has sprung three surprises on the Government, and the Government already has been obliged to adopt two of them.

There is a very good chance that it will eventually adopt the third as well: Labor's decision to take the last three years' worth of James Hardie Industries' donations to the party and to give them to victims of that company's asbestos products instead. The news coverage of Latham handing over the $77,500 cheque this week won Labor publicity worth multiples of this sum.

Howard has resisted this tactic, arguing that the right approach is to wait until the official inquiry into the matter has reported its conclusions, due in mid-September. While this is much sounder in terms of due process, Latham's gesture was much better politics.

But the Latham surprises that really put pressure on Howard were his proposed amendments last week to the enabling legislation for the free trade agreement with the US.

Latham was willing to support the agreement, but on condition that the Government accept two non-negotiable amendments. Neither would interfere with the agreement, said Latham; both are designed to guard against any harmful side effects. One seeks to protect local content rules for Australian TV and radio; the other seeks to guard against any abuses of the Pharmaceutical Benefits Scheme by multinational drug companies.

Howard agreed to the first amendment, but not the second. This was a mistake. It cast Latham as a hero defending the PBS, and denied Howard the prize he had worked so hard to win. Now it was Howard's turn to capitulate, and that's exactly what he did yesterday.

But it came hard. It took Howard a week. And he chose to do it in the most rancorous way possible. Howard decided to yield to Latham, but he was desperately seeking to avoid the "backdown" headlines that would have been plastered all over the story. Like a jet fighter weaving to escape a heat-seeking missile, Howard threw out a great load of chaff yesterday as a distraction.

Howard claimed that Latham's amendment would somehow endanger the whole free trade agreement. The US was so unhappy at the amendment that it could refuse the final formality of an exchange of notes to bring the deal into force, he said.

"And if something does occur along those lines then it will be on the Labor Party's head and nobody else's head."

Is this plausible? To bring the agreement to the point of fruition in the US, the Bush Administration committed itself to the deal and lobbied the Congress for it.

The country's pre-eminent trade lobbyist, Anne Wexler, the creator of the lobbies for all the important trade deals in the US in recent decades, including NAFTA, constructed an alliance of some 250 major companies and industries. Working closely with Howard's man in Washington, the Australian ambassador, Michael Thawley, she also crafted, for the first time, an Australia caucus among members of the US Congress. And she marshalled those forces to deliver the support of 314 of the 425 members of the US House of Representatives and the votes of 80 of the 100 US senators, including the Democratic presidential candidate, John Kerry.

Would the Bush Administration now really frustrate and embarrass all those industries, companies, congressmen and senators, and embarrass the President himself, over a marginal quibble over a single aspect potentially affecting just one of the many constituencies supporting the deal? This is an extremely dubious proposition.

Wexler commented yesterday: "I'm not aware of any clause of the agreement that could possibly nullify US law. Now that it's been passed by the US Congress and signed by the President, it's the law of the land. The only way to junk it is to pass another law saying you have junked it."

Looking past the chaff, the simple truth is that Latham took Howard by surprise, won, and Howard absolutely hated to admit it.

But while these are all good tactical victories for Latham, Labor lives in fear of Howard's potential for strategic surprise - another Tampa-type affair that will not just score a minor point but secure an election.

Labor strategists recently have conducted detailed contingency planning against the possibility that Howard might produce a neo-Tampa. Labor has war-gamed a variety of scenarios, including national security crises and terrorist incidents, in an effort to guard against a Howard surprise.

"We learnt a lot from the 2001 election," says a Labor strategist. "We were standing around slackjawed. We learned that we can't go into these crises with nothing on the record. We learned that we need to have a clearer framework to deal with contentious issues, so that we're not caught in a panic."

Labor also learnt that there were no limits to Howard's capacity for political manipulation and exploitation.

Howard also has another strategic surprise at his fingertips - he gets to choose the date of the election.

So while Latham is adept at the tactical surprise, the twists and turns to deny Howard a firm grip on his quarry, Howard, because of the realities of incumbency, has the ability to deliver strategic surprise. Labor is working hard not to be surprised.